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The mergers and acquisitions wave is engulfing a bigger part of the payment solutions market, with another deal unveiled today.
Palamon Capital Partners, a European growth investor, and Corsair Capital, a private equity investor in international financial services, have announced an agreement to jointly acquire control of Currencies Direct, a provider of Forex and international payment solutions.
The transaction value surpasses £200 million ($309.7 million), with the deal set to close by the end of calendar year 2015, subject to regulatory approvals and other conditions.
Under the terms of the deal, Currencies Direct management will increase its ownership position in the company. In addition, the terms envisage continuing equity participation by the firm’s principal founder, Mayank B Patel OBE, who will become Honorary President.
Currencies Direct’s Private FX segment services more than 150,000 registered retail clients, whereas its Corporate FX segment provides services to small medium enterprise clients for import / export-related activities across a variety of industries, including the e-commerce segment.
Currencies Direct has established market presences in the UK, Continental Europe, Australia, South Africa and the US, and is well positioned to keep expanding internationally. The retail and SME FX market is worth over £3 billion in the UK alone.
When it comes to the rationale for the deal, the acquirers note that the specialist segment of the foreign exchange services industry is expected to grow around twice as fast as the average for the overall industry, as retail and SME customers continue to shift away from banks for their foreign exchange needs. Currencies Direct is poised to take advantage of this long-term industry trend.
Keith Hatton, Chief Executive of Currencies Direct, stated:
“We are excited at the prospects of working with Palamon and Corsair Capital which have demonstrated their expertise in the financial services sector. They are shareholders who underscore a strong vote of confidence in the future of our company and the strategy of the management team. Their acquisition of Currencies Direct provides our company with capital, experience and global relationships to accelerate our strategy to be a leader internationally in foreign exchange and payment processing.”
Daan Knottenbelt, Partner of Palamon Capital Partners, stated, “With its established market position, attractive margins, and exciting growth potential, Currencies Direct is a signature Palamon investment and in line with our core thematics. As experienced growth investors in the consumer-facing financial services sector we look forward to partnering with the management team to provide strategic and financial support to take Currencies Direct to the next level. Currencies Direct’s proven business model, powered by its proprietary affiliate network, positions the company ideally to capitalise further on its strong momentum in this fast growing, dynamic sector.”
Lord Davies of Abersoch, Chairman of Corsair Capital, stated, “We are extremely excited about Currencies Direct. The Company has a very knowledgeable and strong management team. As part of our ongoing review of the financial services industry’s trends and themes, we identified the specialist foreign exchange and international payments industry as a growth sector: banks tend to focus less on retail and SME customers in this area, and specialist players are therefore well-positioned to gain market share and grow significantly above the average industry growth rate. Currencies Direct’s multi-channel distribution model, including its strong network of affiliates, is a key differentiator relative to other specialist international payment providers and banking competitors. Given Corsair Capital’s extensive network of relationships with financial services groups and other institutional partners, we are confident that we can provide value-add to Currencies Direct as it grows its business.”
Mayank B Patel OBE, comments, “I am proud of what Currencies Direct has achieved over the last 20 years and am confident that, given the strength of the management team and the value added expertise of Corsair Capital and Palamon Capital, the business will continue to take advantage of the growth prospects in the sector. I am delighted I will be part of Currencies Direct future as a shareholder and Honorary President.”